The ability to modulate sensitivity in sensory systems is essential for useful information to be extracted from fluctuating stimuli in a wide range of background conditions. The mechanisms underlying sensitivity regulation in insect primary olfactory neurons are poorly understood. Here we reveal that dephosphorylation of Orco(S289) that occurs upon prolonged odor exposure is a mechanism underlying reduction in odorant sensitivity in Drosophila primary olfactory neurons in both sexes. Orco(S289A) mutants, unable to phosphorylate this position, have low intrinsic odorant sensitivity that is independent of altered expression or localization. A phosphomimetic allele, Orco(S289D) , has enhanced odorant sensitivity compared with wild-type controls. To explore the functional ramifications of this phosphorylation in vivo, we generated phospho-specific antiserum to Orco(S289) and show that phosphorylation at this residue is dynamically regulated by odorant exposure with concomitant modulation of odorant sensitivity. Orco(S289) is phosphorylated in the sensitized state, and odorant exposure triggers dephosphorylation and desensitization without altering receptor localization. We further show that dephosphorylation of Orco(S289) is triggered by neuronal activity, and not conformational changes in the receptor occurring upon ligand binding. Mutant flies unable to regulate Orco function through phosphorylation at S289 are defective for odor-guided behavior. These findings provide insight into the mechanisms underlying regulation of insect odorant receptors in vivoSIGNIFICANCE STATEMENT We have uncovered a mechanism underlying olfactory receptor sensitivity regulation in Drosophila The phosphorylation state of Orco (S289) is altered in an odorant-dependent manner and changes in phosphorylation affect receptor sensitivity without changing subcellular localization. We show that neuronal activity triggers the phosphorylation changes and that this phenomenon is important for odorant-guided behaviors in Drosophila This phosphorylation site is conserved in other insects, including mosquitoes, indicating this mechanism may be a target for manipulation of insect behaviors in the future.